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This List of the 10 Lowest-Taxed States in America Will Make a Lot of People Jealous

Every American may be equal under the law, but the nation is far from equal when it comes to tax season.

As April 15 — “Tax Day” for most of us — rapidly approaches, many people are taking a hard look at just how much Uncle Sam is reaching into their wallets.

While most people think of the federal Internal Revenue Service this time of year, there are, of course, also taxes at the state and local level that can make a big difference on our pocketbooks.

It turns out that where you live can have a major impact on your tax burden — and there are some interesting political lessons to be learned by looking at those differences.

Samuel Stebbins of the financial news group 24/7 Wall St. dug into data from the Tax Foundation to report on the lowest- and highest-taxed states in the country.*

“While every state government relies on taxes to operate, no two state tax structures are exactly the same,” Stebbins wrote. “For example, four states do not charge a sales tax and seven states do not levy personal income taxes. In stark contrast, 13 states derive the largest share of their annual tax revenue from sales taxes and nine from personal income taxes.”

So where are the most attractive places to live if your goal is minimizing taxes? Here are the 10 best states, according to Stebbins.

1. Alaska

Yes, you’re going to have to leave the contiguous states and head north if you want to escape oppressive taxes. Alaska has no income tax and no general sales tax. According to 24/7 Wall Street, the state and local tax burden is about 6.5 percent of Alaskans’ income, the lowest number on the list. You just have to put up with some very long winters.

2. South Dakota

Another chilly Northern state is in close competition for the lowest taxes in America. Residents of South Dakota pay only 7.1 percent of their income in state and local taxes, thanks to no income tax. Unlike Alaska, however, this state does have a general sales tax, and a pretty high one at that.

3. Wyoming

Ah, the wide-open skies of Wyoming. The least-populated state in the union is also fairly lenient with its tax structure. Again, there is no state income tax, and although there is a sales tax it’s fairly low. People living there pay about 7.1 percent of their income in state and local taxes, tied with South Dakota.

4. Tennessee

This scenic Southern state may have an income tax, but it’s barely noticeable: In fact, people pay only $49 per capita in state income tax, and that’s no typo. Overall, the tax burden is 7.3 percent of income, making Tennessee a pretty appealing place to live.

5. Louisiana

Another Southern state with fairly low taxes, Louisiana does have both sales and income taxes, but they’re kept pretty low. On average, 7.6 percent of income goes to state and local taxes, earning this locale good marks on the list.

6. Texas

The Lone Star State has long been associated with liberty and freedom, and it lives up to that reputation during tax season. This red state has no income tax, making it very attractive for businesses and families alike. Although it does have a pretty high sales tax, residents pay only 7.6 percent of their income in state and local taxes.

7. New Hampshire

Moving away from the South and to the northeast corner of America, the Granite State is a bit of a low-tax gem in a usually liberal area of the nation. There’s no sales tax, and the per-capita annual income tax amount is only $66. Overall, the state and local tax burden is 7.9 percent of income.

8. Nevada

This state perhaps most famous for entertainment and gambling has been seen as a tax haven for decades, and with good reason. Like many other places on this list, there’s no income tax in Nevada, although its sales tax is a bit steep. People pay around 8.1 percent of their income in state and local taxes.

9. South Carolina

We’re back to the South for the last two entries on the low-tax list. Residents of South Carolina pay 8.4 percent of their income in state and local taxes, and although there are both income and sales taxes, they are relatively low.

10. Mississippi

You know how to spell it, but you might not have known that this often humid state is pretty competitive when it comes to tax rates. Although residents don’t tend to earn as much as in other nearby states, they pay about 8.4 percent of those earnings in state and local taxes, keeping Mississippi on the low end nationally.

Here’s an interesting fact: Of those 10 lowest-taxed states in America, eight of them have Republican governors. It turns out that conservative principles aren’t just good in theory — they tend to work out pretty well in practice.

* “To identify the states with the highest and lowest tax burdens, 24/7 Wall St. reviewed state and local tax burdens as a share of state residents’ income in fiscal 2012 provided by tax policy think tank Tax Foundation. In the case of ties, the state with the higher state and local tax collections per capita dollar value ranked lower on our list. Personal income per capita for each state is for 2017 and came from the U.S. Bureau of Economic Analysis. State individual income tax collections per capita are for fiscal 2016; state and local property tax collections per capita are for fiscal 2015; state general sales tax collections per capita are for fiscal 2016; and all came from the Tax Foundation’s ‘Facts & Figures 2018: How Does Your State Compare?’ report. All data are for the most recent period available.”